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January 4, 2010

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Millennials Will Drive the U.S. Economy

Millennials—those Americans born between 1979-1989—are one of the largest demographics in the country and will soon be entering a strong growth period in both income and consumer packaged goods (CPG) spending.However, these young Americans are not a typical consumer group and taking advantage of this emerging $54.3 billion opportunity presents significant challenges, according to a new study by Information Resources, Inc., Chicago.

Millennials shop less often, spend more per trip and do a greater share of their CPG spending at supercenters.

When compared with older shoppers, millennial households shop less often, spend more per trip, and do a greater share of their CPG spending at supercenters and Walmart, according to IRI. Under budget constraints due to the economy, millennials have pulled back spending in many indulgent and convenience food categories. Further, IRI found that millennial non-food spending is similar to Generation X households.

At a category level, hair care, suntan products and household cleaner cloths are among several categories that have potential for strong growth with millennials, since consumption in many non-food categories peak for shoppers in their 40s when their household size peaks.

Today, 70% of millennials agree that store brands are typically of excellent quality. Surprisingly, millennials’ attitudes and actual purchases of private label brands is roughly on par with older shoppers, which refutes the conventional wisdom that private label acceptance takes a long time to evolve for a given consumer. This private label acceptance also illustrates that branded manufacturers are routinely falling short in their efforts to build their brands with millennials through traditional media, such as TV, radio and print. These traditional approaches are not nearly as influential or as effective for millennials as it was with previous generations. Manufacturers will need to explore other non-traditional methods to reach this group, according to IRI.

Wipes Demand To Boost Nonwovens Usage

Growth of the U.S. population as well as a rise in household and personal income will result in higher expenditures for wipes and other consumer disposables, according to a new study on nonwovens from The Freedonia Group Inc.

The Cleveland, OH-based industry research firm reports that the aging of the U.S. population, leading to sizable increases in the number of people 65 years and older, will boost demand for nonwovens used in medical/surgical and adult incontinence products.On the other hand, Freedonia stated that the U.S. represents a mature market for a number of nonwoven goods, including baby wipes and baby diapers, which will dampen overall sales gains through 2013, as will competition from other types of materials.

Prestige Skin Care Sales Continue to Decline

In October, U.S. prestige skin care sales fell for the 12th straight month in dollars and units, according to The NPD Group, Port Washington, NY. Both dollars and units were down 1%, which represented the lowest declines of the year. Moreover, prestige skin care had the best dollar and unit performance of the three prestige beauty categories (skin care, fragrance, and makeup). Skin care’s average price was flat at approximately $38, according to The NPD Group.

For the first 10 months of 2009, skin care sales declined 5% in dollars and units. Only two segments recorded positive dollar results for October 2009, according to The NPD Group. Sets and kits grew 6% in dollars and 2% in units, while hair care rose 1% in dollars and 3% in units.

Sets and kits, according to The NPD Group, had positive or flat dollar growth for all but two months—June, which was down 15%, and September, which was down 5%. The remaining three segments—face, body and sun—all recorded dollar and unit declines. Sets and kits and sun both saw increases in average price (4% and 2%, respectively). Face care was flat in average price, while body and hair average price declined (8% and 2%, respectively), according to The NPD Group.